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Holding Obama Accountable on Health Care

Ryan Ellis from Americans for Tax Reform yesterday criticized a memo Stuart Butler and I wrote about the promises President-elect Barack Obama made about health care reform. The point of our memo was to keep Obama honest to key campaign promises he made on health that appealed to Republican and conservative voters.

Obama is already hoping these voters will forget the promises he made to win them over. We want to hold Obama to account, and make sure he crafts health care reform that abides by popular principles of choice, affordability, stability and freedom — not a standardized system imposed from Washington.

Ellis outlines what he considers the “good,” “not-so-good,” and “ugly” ideas in our memo. He’s entitled to his opinion, of course, but it’s unfortunate he chose to distort our views and our record. I stand by Heritage’s work in the area of health care reform. Here’s why:

1. Tax treatment. The current tax treatment of health insurance is inequitable, distorts the market, encourages overspending, and drives up overall costs. As Ellis agrees, it needs to be reformed. Contrary to his assertion, we do not want to raise taxes. That’s why we worked with ATR last year to craft tax reform language in the SCHIP debate that met the ATR criteria. We agree that tax reform and tax relief should apply only to taxpayers, not to those who pay no income tax. The purpose of trying to help low-income families with a refundable credit or voucher is to keep them off Medicaid, the entitlement program for the poor, which is the default solution pushed by the left. But we want that refundable credit/voucher to be paid for with reductions in spending, not taxes on other Americans.

2. Portability. Heritage has not proposed limiting tax relief for those who buy in the exchange. Ellis is simply wrong about that. We argue that tax breaks should apply to such coverage, not be limited to it. An exchange is a place for people to shop for coverage (like a farmers market). Our version of an exchange was developed to respond in part to existing tax limitations in the tax code, which penalizes individual, portable ownership of health insurance. It would enable employers to transition from a defined benefit to a defined contribution in health care as they have in retirement, enabling individuals to own and keep their health insurance regardless of job or job status. We do not support using exchanges to regulate insurance.

3. Federalism. Broad national goals were also a key component in welfare reform, remember? Ronald Reagan supported a work requirement on those asking for welfare. Bill Clinton argued, to his credit, that states had to reduce their welfare roles and that welfare must no longer be a permanent way of life. We think state health bureaucracies ought to be held to account as well. We also think that, just as in welfare reform, states should be given wide flexibility in achieving health goals.

4. Federal Employee Health Benefits Plan. Heritage does not support the community rating rules in FEBHP. We have consistently criticized those rules. What we highlight is that FEHBP hinges on choice and competition, not on public plans or standardized benefits. If Obama touts the FEHBP as his model, we don’t apologize for reminding him how it actually works, rather than allow him to make up his own version to sneak in Medicare-for-all. Yes, the government set it up as a generous plan for the feds — hardly a surprise. But competition and choice has meant that the FEHBP has historically had lower cost trends compared to other large employer group plans with equivalent demographics.

5. Bipartisanship. We think Obama should listen to Republicans and conservatives. Heritage fought vigorously against Hillarycare in 1993 and remains committed to free-market principles on healthcare reform. The legislation we helped design for Sen. Don Nickles (R-OK) at that time, which gained strong support in the Senate as well as the House, became the bulwark against the Clinton bill and assured its defeat. Ellis should get his history right. Don’t worry. We won’t support an Obama plan that violates conservative principles. When the Obama administration puts forth a health care reform plan, we will hold him accountable for his campaign commitment to choice of plan and doctor and an insurance system that assures portability.

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